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Glossary

Emergency fund

Cash held for the bill you didn't plan for.

An emergency fund is money kept liquid and separate, sized to cover three to six months of essential spending — housing, food, insurance, minimum debt payments and transport.

Its job is not return, it is avoiding the credit card. The right comparison is not what the cash earns; it is the APR you would otherwise pay.

It belongs in a high-yield savings account, not in investments that can be down exactly when the emergency arrives.

Today, in real numbers

A $15,000 fund in the national average savings account at 0.38% earns about $57 a year. A high-yield account paying 4% would earn about $600 — same money, same access, different bank.

See the savings page
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